One Bank Freaks Out: "Wake Up Folks, It's Not Risk Positive"

The following note, sent this afternoon by the bank that is also the world's largest currency trader, best captures the futility of trying to make any sense of today's "market" reaction.

So somehow we have embraced the theme that was with us through January. On a day when inflation beats in the US (incidentally retail sales missed):  stocks are up, yields are up and the USD lower does not add up.

On the inflation side, that fact that Central Banks, especially the Fed, may need to be more aggressive, certainly makes some of the conditions suggested above, questionable at best.  So does US curve steepening.

When the layers of the onion get peeled away, EM and commodity currencies will have a lot to think about as yields push up.

I completely disagree with some of the USD moves, especially AUD and CAD. Rates in the US look ready to extend.

Wake up folks, it is not risk positive.

Judging by the nearly 70 points surge in S&P futs off the lows, the "market" completely disagrees with this disagreement.


rrrr major major ma… Wed, 02/14/2018 - 14:39 Permalink

Actually it adds up very well. If the dollar is down, that's inflationary. If bond yields are up, that means the capital that's in the bonds is worth less, and that's inflationary. Stocks are up because dollars are worth less. Really it makes perfect sense. What most people miss is the fact that it's intended. Most people think that what moves the economy is beyond human control. But no. It's very much under the influence --if not under the absolute control-- of some humans.

In reply to by major major ma…

new game eclectic syncretist Wed, 02/14/2018 - 16:40 Permalink

what aint gonna add up is the cost of interest on the debt. 457 billion alone and rising. ha, and inflation needs to be stopped -how? lol - jawbonering it won't work! some raising of rates or bens trick, qe infinity? cornered yet? squirm like the rat you are, cause i would  like to see you get out of this one with a straight face. finally, the fed is fuked imo...

put that in your pipe  congress and senator-spend-aholic and smoke the bitch til ya choke and keel over...

In reply to by eclectic syncretist

Snaffew DaiRR Wed, 02/14/2018 - 20:56 Permalink

then they aren't pricing in the ballooning debt as there will be less money to service the debt with lower rates.  You cannot hide from the problem by moving numbers around...the problem only gets worse.  A 4 day rally after a 4 day selloff and "they" are pricing in future lower rates.  The markets have long ago stopped looking 3-6 months out and now make immediate moves followed by bullshit analysis and explanations later.

In reply to by DaiRR

A Sentinel Lokiban Wed, 02/14/2018 - 15:09 Permalink

So the start of the whole crypto thing is less muddled than the start of Google. 


I don’t begin to imagine that I get it, but I do know this: Be VERY careful. Not must normal hedge position careful- be REALLY careful, and don’t put full faith into anything. And that goes for a femtobyte of digital too.

In reply to by Lokiban

beyondtheprogramming Lokiban Wed, 02/14/2018 - 16:33 Permalink

If Hillary won the election, she was planning to roll out blockchain. She copyrighted her own proprietary currency, called Clinton (CLINT) coin, way back in 2009! And remember, that famous NSA whitepaper came out in 1998, under her husband Pres. Bill Clinton's watch. Coincidence? Who would put their faith and trust into anything with a Clinton-stink all over that much of it?

In reply to by Lokiban

Snaffew joep3joep3 Wed, 02/14/2018 - 17:46 Permalink

this country hasn't had any manufacturing to speak of since the end of WWII.  Where is all the capital going to come from to build plants and who will work in the plants when the plants need to be competitive on a global scale.  Certainly not Americans with their pricy labor unions, exorbitant salaries, health insurance, dental plans,  sick time, vacation time, 401k plans , 3 month paid maternity leave.  Face it---Americans have long ago priced themselves out of any manufacturing jobs.

In reply to by joep3joep3

Dragon HAwk Wed, 02/14/2018 - 14:23 Permalink

We do not have a Transparent Market.  it's like an Iceberg, we are looking a the Tip, and wondering which way the Unseen part is Moving Derivatives and side bets and payoffs, and frauds

buzzsaw99 Dragon HAwk Wed, 02/14/2018 - 14:29 Permalink

if it was like an iceberg there would be liquidity.  there isn't.  did you see that move lower on the s&p futes this a.m. after the cpi news came out?  yeah, that was probably one guy in his underwear trying to move out of a five figure position.  the stop hunters got him.  lolz.  too bad he couldn't hang on he'd be rolling in it this afternoon.  another one bites the dust.

In reply to by Dragon HAwk

Darkman17 Wed, 02/14/2018 - 14:24 Permalink

I'm sitting here wondering if real rates dropped and thats why the markets are up, or if its a noob buy the dip party going on. Or I am missing something else. 

buzzsaw99 HarryKallahan Wed, 02/14/2018 - 14:31 Permalink


edit:  freaking goldman sachs is offering a 1 cd at 2.05%.  i was hoping some smaller banks would do this trade.  it's a good thing it isn't higher than that or i might sacrifice my principles for a dance with the devil.

edit 2:  does anyone else wonder why the squid is paying so much?  the 2Y is at 2.16%.  They can't be thinking the overnight is going up more than 0.5% can they?  are they worried about their capital cushion maybe?  building up a base with plans to put the screws to them later?  there has to an angle i just can't see it.

In reply to by HarryKallahan

Brazen Heist Wed, 02/14/2018 - 14:34 Permalink

Dollar down, gold up, oil up...crypto back up and stawks looking precarious.

Hedge accordingly bichez.

Keep an eye on the yield curve.

The dollar will be sacrificed at the altar.